Insurance companies have decided to play safe to avoid any confrontation with market regulator Sebi, which is locked in a turf war against insurance watchdog IRDA.
They have decided not to use terms such as net asset value (NAV) or assets under management (AUM) that equate their unit-linked plans (ULIPs) with mutual fund schemes. NAV refers to the market value of the assets of the scheme minus its liabilities, AUM is the market value of assets that an investment company manages on behalf of investors.
The move by insurers follows a decision by Sebi to ban 14 life insurance companies from raising funds through unit-linked insurance policies (ULIPs) which invest
money into equity and debt markets.
The market watchdog’s move was contested by IRDA, leading to a turf war between the regulators. Gener-ally, mutual funds provide daily NAV to its customers to indicate the fund’s performance.
And that’s why ULIP schemes that guarantee the “highest NAVs” had to take a back seat for the moment.
